Tata Motors maintains momentum, thanks to JLR
Wednesday, November 10, 2021 4:53 PM

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Parvatha Vardhini C.

BL Research Bureau

The momentum generated in the April –June quarter numbers of Tata Motors has spilled over into the second quarter as well, with Jaguar Land Rover (JLR) posting profits for the fourth successive time in the quarter ended September 2010.

Driven by a 58 per cent growth year on year growth in net revenues in the JLR business, Tata Motors' consolidated net revenues for the second quarter grew 37 per cent.

Better mix, lower costs

Despite downward pressure form standalone margins, consolidated EBITDA margins shot up to 14.5 per cent, thanks to superior margins of JLR.

This growth has primarily been achieved by a combination of robust volumes, good product mix, a favourable market mix and cost reduction efforts at JLR.

JLR continued to witness strong demand, with year on year growth in retail volumes touching 21 per cent during the quarter. Volume growth at Jaguar was driven by the new XJ introduced in May 2010 and by the XF, while the Discovery, Freelander and Range Rover Sport kept the Land Rover numbers ticking.

Average selling prices have also expanded in the quarter, thanks to the strong realisations across markets. Continuing with the trend in the first quarter, volumes from China showed a 72 per cent year on year growth in the July-September period.

Although the absolute numbers may be relatively small, from a contribution of about 7 per cent to the total volumes in Q1, China now brings in 10 per cent.

Given that there are concerns about growth in its traditional European markets, the increasing contribution from China acts as a good diversifier and bodes well for volume growth in future.

Aside of this, the company has also reaped the benefits of the cost rationalisation efforts put in place last year, in the first and second quarters. This, it has achieved by streamlining material costs, renegotiation of wage agreements and improvements in product positioning, amongst other initiatives.

Healthy margins are expected to continue as Tata Motors is looking to prune costs further by merging two of the three JLR plants in the UK and sourcing of low cost components from India and China; besides setting up of plants for assembling JLR vehicles in these countries.

Indian operations

On a standalone basis the company achieved 44 per cent revenue growth backed by a 23 per cent volume growth in the commercial vehicle (CV) segment and a 36 per cent volume growth in passenger cars.

Like most others in the auto industry, Tata Motors felt the pressure of rising commodity prices. EBITDA margins deteriorated to 9.7 per cent as against 13.4 per cent in the September 2009 quarter.

Although CV sales is expected to moderate from now on, healthy freight rates, pick up in demand for haulage vehicles and the demand for variants of the Prima range of CVs (NYSE:CVS) hold promise.

Besides, the Indigo Manza, Aria and the refreshed Safari are expected to lead sales on the passenger vehicles front.

http://www.blonnet.com/2010/11/10/stories/2010111051150200.htm http://www.blonnet.com/2010/08/11/stories/2010081153240100.htm

(Source: )
(Source: Quotemedia)


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